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Commentary

Streaming Radio Killed The Music Video Star

While there might have been a time when music television had taken a higher place than radio in teens’ esteem, the pendulum has begun to swing in
the opposite direction with the growth of streaming radio services. Unlike traditional radio stations (which also offer streaming), the services below offer teens customizable, on-demand listening
options that they can take anywhere. There’s a battle brewing among service providers to win over young listeners with free, ad-supported options, and it’s a competition that marketers
should watch with interest.

The Key Players

Pandora is one of the
oldest options in the streaming music business having launched in 2000, and as a result, it has one of the largest listening bases. More than 73 million Americans tune into Pandora monthly, a figure that’s rising along with
the number of hours listeners spend with the service. The crux of the service is that it streams songs it knows users will like based on a few listening preferences. Teens are drawn to the service
because it’s cheap (free or $3.99/month) and it just works, accurately streaming songs based on users’ preferences.

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Spotify
launched in 2006, and though it didn’t make its way to the U.S. until 2011, it had already earned a reputation among American youth. In just about two years, it had built an active listener base of 24 million. And in late 2013, it opened mobile streaming to
all users, formerly available only to paying subscribers. Spotify sets itself apart for its social features, allowing users to follow artists and friends, see what the people they follow are listening
to, co-create playlists, and more. As teens migrate away from Facebook, services such as Spotify give them a way to connect with friends around a medium they love. (Rdio is a notable similar
competitor that has yet to match Spotify’s listener base.)

Google became the next major entrant into the field of streaming radio
in mid-2013 with its All Access service. Piggybacking on its Google Music locker service launched in 2011, All
Access offers highly customizable listening like Spotify, but with the added benefit of allowing Google Music users to import their entire library into the service. Leveraging the Android platform, which has captured the attention of young people, All Access could eventually win the hearts of
teens by offering a highly personalized listening experience, but will be hampered by not offering a free option (the service is $9.99/month).

ITunes Radio brings one of the largest digital music libraries to the streaming realm. Announced in June 2013, at first
glance it looks like very similar to Pandora, allowing listeners to create playlists of music similar to favorite songs and albums – though early critics claim iTunes Radio isn’t as good as Pandora at suggesting songs. It may not
need to be as good simply because it’s baked into every iDevice – that’s how it managed to nab 11 million active listeners in just days. At its core, iTunes Radio is designed to sell
music and beats all other options for its simplicity of adding music to a wish list or buying, though that feature is unlikely to win over teens who are getting used to a life of renting and streaming
media instead of owning it.

Announced this January with a Super Bowl ad splash and celebrity spokespeople, Beats Music is the latest
streaming service promising to put all the others out of business. From the headphones brand with a passionate teen following, this fledgling service has gained attention for its “Sentence” feature, similar to Songza, which lets listeners
choose music based on mood and setting. Perhaps more influential to teens, Beats Music also offers playlists curated by well-known music personalities, including a former BET exec and the editor of
the music mag Pitchfork. Whereas other services emphasize the algorithms they use to suggest songs, Beats Music is marketing the human
touch and connecting with teens on the power of music as self-expression. Couple that with a family share plan and ads filled with music icons (from Rev. Run to Ellen Degeneres), it might make
good on its claim to compete head to head with more established services.

What It Means For Marketers

Whether the services above are ad-supported or offer brand integrations (Spotify, Google Music, and Beats Music all offer branded playlists, for example),
they are a key new way to reach teens in a fragmented media environment. They are not only a venue for advertising, but also offer a means to connect with teens on a personal level. With the data that
such services have about their users, including mood and listening patterns, brands can target their messages in a medium that deeply resonates with youth.

As these services compete for superiority, marketers should watch the battle to know where to put ad dollars, as well as pay attention to which features win to better
understand teens’ lifestyles. Will low price trump social features? Is music based on mood more important than music discovery? Do celebrities draw them in or is it open access to all
music?

Time will tell which will dominate the teen scene. Meanwhile, music videos will continue to capture teen interest, but streaming radio
services that give them personalized music on demand (and on their mobile devices) fill a need and will increasingly fill their time.